Cheating code words complicate VW emissions probe

FRANKFURT, Germany (April 19, 2016) — Investigators probing Volkswagen Group's diesel-emissions cheating are struggling to make headway through data secured from more than 1,500 laptops that includes obscure company code words, according to people familiar with the status of the investigation.

This means it's unlikely there will be a complete report on the car maker's emissions cheating by the end of the month when VW is due to report 2015 earnings, the sources added.

The probe has been slowed by the use of dozens of code words, including “acoustic software,” for the illicit technology Volkswagen used to turn off pollution controls when cars were on the road, said the sources, who asked not to be identified because the investigation is confidential.

The confusion along with partly insufficient and outdated computer systems made it difficult to find evidence concrete enough to hold individual employees accountable, they said.

About 450 internal and external investigators have focused on about 20 employees linked to the deception, according to the people familiar with the probe, which is being led by U.S. law firm Jones Day with assistance from Deloitte L.P. Proceedings have dragged on because many interviewees were reluctant to provide insight due to fear of the legal consequences, said the sources.

Nearly every step of VW's efforts to recover from the cheating scandal has taken more time than expected. The company pushed back its reporting date for last year's earnings, delayed its shareholders' meeting and sought a month's extension on a court deadline for negotiating a solution for rigged cars in the U.S. Most of the 11 million tainted cars are still on the road after a sluggish start to a recall in Europe and as talks in the U.S. remain unresolved.

Complete clarification

Stephan Weil, the prime minister of the German state of Lower Saxony, Volkswagen's second-largest shareholder, had called on the company to provide “complete clarification” by this month on how the cheating originated. Volkswagen will report last year's earnings figures on April 28.

Mr. Weil told lawmakers last week that investigators had done hundreds of interviews.

“We're in consultations regarding the clarification of the diesel issues,” Volkswagen said in an emailed statement. “We'll comment in the second half of April.”

VW has so far insisted that a small group of individuals were responsible for the so-called defeat device and that senior management was unaware of the scope of the issue until shortly before it became public on Sept. 18. Former CEO Officer Martin Winterkorn probably missed warning signs including a May 2014 memo, according to a Volkswagen statement last month.

A full account of the wrongdoing will be critical for Volkswagen to move on from the crisis. VW had planned to provide a comprehensive report on the wrongdoing by its annual shareholder meeting, which was delayed to June from April 21 due to uncertainty over the financial impact of the scandal.

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This Bloomberg News report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.